Nothing Funny About ‘Spoofing,’ SEC Says

(CN) – The SEC on Tuesday charged a Canadian citizen with layering, a “lucrative market manipulation scheme” in which he placed both buy and sell orders, only one side of which he intended to execute, to trick other players into buying shares. The SEC sued Aleksandr Milrud, 50, of Ontario, in Federal Court. It accuses Milrud, 50, who also owns a home in Aventura, Fla., of layering, also known as spoofing. “In a layering scheme, a trader places multiple orders that the trader does not intend to have executed on one side of the market – for example, to sell a stock – while nearly simultaneously placing an order that the trader does intend to have executed on the opposite side of the market – i.e., to buy the same stock,” the SEC says in the complaint. “The purpose of the non-bona fide sell orders is to create a false appearance of sell interest in the security and thus to trick other market participants to execute against the trader’s bona fide buy order at an artificially depressed price. Once the bona fide buy order in the above example is executed (in full or in part) at the depressed price created by the non-bona fide sell orders, the trader cancels any open non-bona fide sell orders.” The SEC claims that Milrud “led and managed” several groups of traders who spoofed and layered since January 2013 “and generated substantial illegal profits.” The 34-page lawsuit does not say how much money Milrud made from his alleged spoofing. The SEC seeks disgorgement, penalties and an injunction.